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Dividends
1. Cash dividend
- Treated as income
- Credited to investment account
- Not treated as income if equity method is used
2. Property dividend
- Or dividends in kind
- Treated as income at fair value of property received
3. Liquidating dividend
- Represents return on investment
- Not income
4. Stock dividend
- Increase share/ decrease cost per share / no effect on the total cost of investment
- Not income
a. Same as those held
memo entry on part of investor
Do not affect total cost of investment
Reduce the cost of investment per share
b. Different from those held
allocate cost of original investment between original shares and the
different stock dividends on the basis of fair value.
reduce the total cost of original investment because new investment
account is set up for stock dividend received.
Stock rights
1. Accounted for separately
2. Not accounted for separately
- Embedded derivative but not stand alone derivative. Component of a hybrid or
combined contract(host contract), with the effect that some of the cash flow of
combined contract vary in a way similar to stand alone instrument.
- Embedded derivative shall be separated from the host contract and accounted for
separately under certain conditions.
- However, if host contract is a financial asset, embedded derivative is not separated.
- If host contract is measured at fair value thru profit or loss embedded derivative is
not separated.
Dividend on
- Excluded from cost of investment
- Example: Purchase date January 1, 2017; dividend declaration date December 15,
2016; date of record January 31, 2017; date of payment March 31, 2017
*Cumulative balance
1. PFRS 9 cumulative balance of UG/UL taken to SHE. (FV Original Cost = UG/UL)
2. PAS 39 0
Sale
1. TS
Net SP FV = G/ L on Sale
2. AFS
a. PAS 39
Net SP Cost = G/L on Sale
b. PFRS 9 0 ; no G/L